17
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ------------ to
--------------
Commission file number: 000-29141
PREFERRED INVESTMENTS, INC.
--------------------------------------
(Exact name of small business issuer as specified in its charter)
Wyoming 86-0970149
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
5505 N. Indian Trail, Tucson, Arizona 85750
------------------------------------------
(Address of principal executive office) (Zip Code)
(520) 577-1516
----------------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
----- -----
The number of outstanding shares of the issuer's common stock,
$0.001 par value, as of June 30, 2000 was 1,000,000.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS..................................3
Condensed Balance Sheets as of December 31, 1999
and June 30, 2000....................................5
Condensed Statements of Operations
for the Three and Six Month Periods Ended
June 30, 2000 and 1999...............................6
Condensed Statements of Cash Flows
for the Six Month Periods Ended
June 30, 2000 and 1999...............................7
Notes to Unaudited Condensed Financial Statements.........9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................10
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.......................................12
ITEM 2 CHANGES IN SECURITIES...................................12
ITEM 5 OTHER INFORMATION.......................................12
INDEX TO EXHIBITS..............................................13
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
PAGE 2
PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Preferred
Investments, Inc., a Wyoming corporation, and its subsidiaries and
predecessors unless otherwise indicated. Unaudited, condensed interim
financial statements including a balance sheet for the Company as of
the quarter ended June 30, 2000 and statements of operations,
statements of shareholders equity and statements of cash flows for the
interim period up to the date of such balance sheet and the comparable
period of the preceding year.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
PAGE 3
INDEPENDENT ACCOUNTANTS' REPORT
Preferred Investments, Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Preferred
Investments, Inc. (a development stage company) as of June 30, 2000 and
December 31, 1999, and the related statements of operations for the
three and six month periods ended June 30, 2000 and 1999, and cash
flows for the six month periods ended June 30, 2000 and 1999. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
August 9, 2000
PAGE 4
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, September 30,
2000 1999
-------------- ---------------
ASSETS: $ - $ -
============== ================
LIABILITIES & STOCKHOLDERS'EQUITY
Current Liabilities:
Accounts Payable & Accrued Expenses $ 250 $ -
-------------- ----------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 Shares at
June 30, 2000 and December 31, 1999 1,000 1,000
Paid-In Capital 2,255 75
Retained Deficit (1,055) (1,055)
Deficit Accumulated During the
Development Stage (2,455) (25)
------------- ---------------
Total Stockholders' Equity (250) -
------------- ----------------
Total Liabilities and
Stockholders' Equity $ - $ -
============= ================
See accompanying notes and accountants' report.
PAGE 5
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
since
For the Three Months For the Nine Months October 20
Ended Ended 1999 Inception
June 30, June 30, of Development
-------------------- --------------------- Stage
2000 1999 2000 1999 --------------
---- ---- ---- ----
Revenues $ - $ - $ - $ - $ -
--------- --------- -------- --------- -----------
Expenses
General and
Administrative 1,550 - 2,430 - 2,455
--------- --------- -------- ---------- -----------
Net Loss $ (1,550) $ - $(2,430) $ - $ (2,455)
========= ========= ======== ========= ===========
Basic & Diluted
loss per share $ - $ - $ - $ -
========= ========= ======== =========
See accompanying notes and accountants' report.
PAGE 6
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
Since
October
For the nine months ended 20,1999
June 30, Inception of
-------------------------- Development
2000 1999 Stage
------------ ------------ ---------------
CASH FLOWS FROM OPERATING
-------------------------
ACTIVITIES:
----------
Net Loss $ (2,430) $ - $ (2,455)
Increase (Decrease) in:
Accounts Payable 250 - (200)
------------ ------------ --------------
Net Cash Used in operating
Activities $ (2,180) $ - $ (2,255)
CASH FLOWS FROM INVESTING
-------------------------
ACTIVITIES:
-----------
Net cash provided by investing
activities - - -
------------ ----------- -------------
CASH FLOWS FROM FINANCING
-------------------------
ACTIVITIES:
-----------
Capital contributed by
shareholder 2,180 - 2,255
------------ ----------- -------------
Net Cash Provided by
Financing Activities 2,180 - 2,255
------------ ----------- -------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
------------ ----------- -------------
Cash and Cash Equivalents
at Beginning of Period - - -
------------ ----------- -------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
============ =========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
------------------------------------------------
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 75
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
-----------------------------------------------------------------------
See accompanying notes and accountants' report.
PAGE 7
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Preferred Investments,
Inc. is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the
preparation of the financial statements.
The unaudited financial statements as of June 30, 2000 and for the
three and six months then ended reflect, in the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to fairly state the financial position and results of
operations for the three and six months. Operating results for interim
periods are not necessarily indicative of the results which can be
expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of
Wyoming on April 9, 1997. The Company ceased all operating activities
during the period from April 9, 1997 to October 20, 1999 and was
considered dormant. Since October 20, 1999, the Company is in the
development stage, and has not commenced planned principal operations.
Nature of Business
The Company has no products or services as of June 30, 2000. The
Company was organized as a vehicle to seek merger or acquisition
candidates. The Company intends to acquire interests in various
business opportunities, which in the opinion of management will provide
a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents to the extent the funds are not
being held for investment purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles required management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Loss per Share
The reconciliations of the numerators and denominators of the
basic loss per share computations are as follows:
PAGE 8
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(Continued)
Income Shares
----------- ------------ Per Share
(Numerator) (Denominator) Amount
For the three months ended June 30, 2000
-----------------------------------------
Basic & Diluted Loss Per Share
Loss to common shareholders $ (1,550) 1,000,000 $ -
========= ========== ==========
For the six months ended June 30, 2000
--------------------------------------
Basic & Diluted Loss Per Share
Loss to common shareholders $ (2,430) 1,000,000 $ -
=========== =========== ==========
For the three months ended June 30, 1999
----------------------------------------
Basic & Diluted Loss Per Share
Loss to common shareholders $ - 1,000,000 $ -
=========== =========== ===========
For the six months ended June 30, 1999
--------------------------------------
Basic & Diluted Loss Per Share
Loss to common shareholders $ - 1,000,000 $ -
=========== ========== ===========
The effect of outstanding stock equivalents are anti-dilutive for
June 30, 2000 and 1999 and are thus not considered.
Reclassification
Certain reclassifications have been made in the 1999 financial
statements to conform with the June 30, 2000 presentation.
NOTE 2 - INCOME TAXES
As of June 30, 2000, the Company has a net operating loss
carryforward for income tax reporting purposes of approximately $3,000
that may be offset against future taxable income through 2011. Current
tax laws limit the amount of loss available to be offset against future
taxable income when a substantial change in ownership occurs.
Therefore, the amount available to offset future taxable income may be
limited. No tax benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater change the carry-
forwards will expire unused. Accordingly, the potential tax benefits
of the loss carry-forwards are offset by a valuation allowance of the
same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common
with a development stage company, the Company has had recurring losses
during its development stage.
PAGE 9
PREFERRED INVESTMENTS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(Continued)
NOTE 4 - COMMITMENTS
As of June 30, 2000 all activities of the Company have been
conducted by corporate officers from either their homes or business
offices. Currently, there are no outstanding debts owed by the Company
for the use of these facilities and there are no commitments for future
use of the facilities.
NOTE 5 - STOCK SPLIT
On October 20, 1999 the Board of Directors authorized 1,000 to 1
stock split, changed the authorized number of shares to 100,000,000
shares and the par value to $.001 for the Company's common stock. As a
result of the split, 999,000 shares were issued. All references in the
accompanying financial statements to the number of common shares and
per-share amounts for 1999 have been restated to reflect the stock
split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are intended to be covered by the safe harbors created
thereby. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including without limitation, the
ability of the Company to continue its expansion strategy, changes in
costs of raw materials, labor, and employee benefits, as well as
general market conditions, competition and pricing. Although the
Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions
could be inaccurate, and therefore, there can be no assurance that the
forward-looking statements included in this Quarterly Report will prove
to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements including herein, the inclusion of such
information should not be regarded as are presentation by the Company
or any other person that the objectives and plans of the Company will
be achieved.
As used herein the term "Company" refers to Preferred Investments,
Inc., a Wyoming corporation and its predecessors, unless the context
indicates otherwise. The Company is currently a shell company whose
purpose is to acquire operations through an acquisition or merger or to
begin its own start-up business.
The Company is in the process of attempting to identify and acquire a
favorable business opportunity. The Company has reviewed and evaluated
a number of business ventures for possible acquisition or participation
by the Company. The Company has not entered into any agreement, nor
does it have any commitment or understanding to enter into or become
engaged in a transaction as of the date of this filing. The Company
continues to investigate, review, and evaluate business opportunities
as they become available and will seek to acquire or become engaged in
business opportunities at such time as specific opportunities warrant.
Results of Operations
PAGE 10
The Company had no sales or sales revenues for the three and six months
ended June 30, 2000 or 1999 because it is a shell company that has not
had any business operations for the past three years.
The Company had no costs of sales revenues for the three and six months
ended June 30, 2000 or 1999 because it is a shell company that has not
had any business operations for the past three years. The Company had
$1,550 and $2,430 in general and administrative expenses for the three
and six month periods ended June 30, 2000 and $0 for the same periods
in 1999.
The Company recorded net loss of $1,550 and $2,430 for the three and
six months ended June 30, 2000 compared to $0 loss for the same periods
in 1999.
Capital Resources and Liquidity
At June 30, 2000, the Company had total current assets of $0 and total
assets of $0 as compared to $0 current assets and $0 total assets at
December 31, 1999. The Company had a net working capital deficit of
$250 and $0 at June 30, 2000 and December 31, 1999.
Net stockholders' deficit in the Company was $250 and $0 as of June 30,
2000 and December 31, 1999.
PAGE 11
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None/Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None/Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) Exhibits. Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits on page 12 of
this Form 10-QSB, and are incorporated herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, this 9th day of August, 2000.
Preferred Investments, Inc.
/s/ Daniel L. Hodges
Daniel L. Hodges August 9, 2000
President/CFO and Director
PAGE 12
EXHIBIT INDEX
Exhibit No. Page No. Description
27 12 Financial Data Schedule "CE"
PAGE 13
[ARTICLE] 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30,
2000 THAT WERE FILED WITH THE COMPANY'S REPORT ON FORM 10-QSB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[CIK] 0001101917
[NAME] PREFERRED INVESTMENTS, INC.
[MULTIPLIER] 1,000
[CURRENCY] U.S. Dollars
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] APR-1-2000
[PERIOD-END] JUN-30-2000
[EXCHANGE-RATE] 1
[CASH] 0
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 0
[CURRENT-LIABILITIES] 0
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1
[OTHER-SE] (1)
[TOTAL-LIABILITY-AND-EQUITY] 0
[SALES] 0
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 2
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (2)
[INCOME-TAX] 0
[INCOME-CONTINUING] (2)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (2)
[EPS-BASIC] 0
[EPS-DILUTED] 0
#743654
PAGE 14
